Other questions
I appreciate you sharing your concerns in detail, DS127. Dealing with a significant difference in your Cost of Goods Sold (COGS) after migrating is challenging. I'll outline below the necessary steps to correct this.
Keep in mind QuickBooks Online follows the First in, First out (FIFO) for inventory accounting. This method means that the earliest inventory items purchased are considered sold first.
Once you migrate, you'll need to set the FIFO start date. The system will then recalculate the inventory based on this date and make the necessary adjustments.
Incorrect cost and initial quantity during the setup will result in an inaccurate value in the inventory asset account and COGS. Here's a step-by-step guide on how to correct this:
- Hover over the Gear icon. Select Products and Services.
- Locate the item, then press Edit from the Action column.
- Pick Starting Value.
- Click Got it.
- Enter the item's correct quantity and cost.
- Hit Save and Close.
For more detailed information, check out this article: What is FIFO and how is it used for inventory cost accounting?
Regarding the tax returns, you can consider discussing the options with your CPA to determine the best approach for your situation.
Moreover, you can visit these resources as a guide to managing your inventory and account effectively:
- Use reports to see your sales and inventory status.
- Impacts of inventory tracking on the Balance Sheet and Profit & Loss reports.
- Getting Started in QuickBooks Online.
Correcting the starting value can indeed help correct your COGS. It's essential to pick an approach that aligns with your financial reporting needs. If you have any additional queries, feel free to share them with us. Stay safe, DS127!
